- GBP/USD may further appreciate as the US Dollar weakens amid improved market sentiment.
- The European Union and the United States are nearing an agreement to implement 15% US tariffs on EU goods.
- Traders await S&P Purchasing Managers Index data from the United Kingdom on Thursday.
GBP/USD remains steady after four days of gains, trading around 1.3580 during the Asian hours on Thursday. The pair maintains its position near two-week highs as the US Dollar (USD) continues to weaken amid risk-on sentiment, driven by the optimism over further trade deals between the United States (US) and key partners.
The Financial Times reported that the European Union (EU) and the United States (US) are closing in on a deal that would impose 15% tariffs on EU goods imported into the US. Additionally, US President Donald Trump announced on Tuesday a major tariff deal with Japan, which includes a 15% tariff on Japanese exports.
However, the downside of the US Dollar could be restrained amid easing concerns over the Federal Reserve’s (Fed) independence. US Treasury Secretary Scott Bessent said late Thursday that a nominee for the next Federal Reserve Chair is likely to be announced in December or January. Bessent emphasized that there is “no rush” to select a successor to current Fed Chair Jerome Powell.
In the United Kingdom (UK), traders will likely observe S&P Purchasing Managers Index (PMI) data, due on Thursday. The report is expected to show a slight improvement in manufacturing and growth in the service sector in July. Friday’s Retail Sales are also projected to rebound in June, helped by hot weather.
The Bank of England (BoE) is anticipated to temporarily pause its sales of long-term GILTS due to subdued demand from traditional buyers like pension funds. Meanwhile, traders have slightly reduced their expectations for BoE policy easing, though they still project two rate cuts in 2025.
